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The Supreme Court has today dismissed Asda’s appeal in equal pay proceedings brought by 35,000 Asda store workers seeking to compare their terms with those who work in Asda’s distribution depots.

The appeal raised this question: in principle, can Asda store workers seek to compare themselves with Asda depot workers where each group works in mutually exclusive establishments? The Supreme Court has determined that the answer to that question is “yes” and the claims should therefore proceed to trial.

The key test was whether “common terms” were observed as between Asda’s stores and distribution depots, either generally or for “employees of the relevant classes”. That test derives from section 1(6) of the Equal Pay Act 1970 and section 79(4) of the Equality Act 2010 (Asda did not contend on this appeal that there was any material difference between the two statutory tests, a point on which the Supreme Court was inclined to agree: [60]). As no depot workers worked in stores (and vice versa), the Employment Tribunal had to apply what is known as the North hypothetical: if depot workers were moved to work in stores, would they remain on common (i.e. broadly similar) terms to those enjoyed in depots?

Unlike previous public sector challenges in which the North hypothetical had been applied, this was not a case in which the terms for each class were governed by a collective agreement applicable to the jobs, wherever they were performed. Asda therefore argued that there was no evidential basis for the Tribunal’s finding that its depot workers would remain on common terms and conditions if they were hypothetically moved to work in its retail stores.

The Supreme Court disagreed. It considered that the Employment Tribunal had been entitled to reach the conclusion it had on the evidence ([54]). Indeed, its judgment may well be read as indicating that the North hypothetical will very likely be found satisfied unless the difference between establishments can be shown to be clearly rooted in geographical factors. Thus, the Court concluded at [46] that it is  “very clear that the common terms requirement is intended to operate only within a very narrow compass where the differences in terms and conditions are wholly or mainly derived from the physical separation of the comparator’s establishment”. And further at [62] that the “limited function of the threshold test is to “weed out” … comparators who cannot be used because the differences between them and the claimants are based on geographical factors, and possibly also historical factors” (the word “possibly” being a notable addition to Lord Bridge’s oft-cited dictum that the common terms test exists because there may be “perfectly good geographical or historical reasons why a single employer should operate essentially different employment regimes at different establishments”).  

As the claimants succeeded in meeting the domestic statutory test for bringing a cross-establishment equal pay claim, the Supreme Court did not need to go on to consider whether the ‘single source’ test derived from EU law offered them an alternative route to the same end-point. The proper application of that test therefore remains to be considered in a future case.

The full judgment is available here.

Lord Pannick QC and Hollie Higgins acted for the Appellant, Asda Stores Ltd.

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